Are you planning staff cuts?

Companies intend to lay off staff and freeze recruitment as the impact of the credit crunch takes its toll, according to the quarterly KPMG business confidence survey

The majority of businesses are now planning to reduce staff
levels in a bid to remain profitable in the wake of the global credit crunch.

A business confidence survey carried out by KPMG found that
the number of companies planning on making staff redundant had doubled since
the start of the year from 29% in the first quarter to 53%.

A similar figure (52%) said they would stop recruiting new
staff in a bid to keep costs down.

Most (60%) of the businesses polled thought the downturn
would last for a further one or two years, but a more pessimistic 20% predicted
it would continue until 2013.

"The clouds that were on the horizon when we first conducted
this survey back in early spring are now right overhead, with businesses now
feeling the impact of this so-called ‘perfect storm' of rising inflation,
tightening credit conditions and plummeting consumer confidence," said Malcolm
Edge, regional chairman for KPMG in the north.

In a separate survey, the organisation also warned that
small businesses would continue to be hit hard by larger companies taking
longer to settle invoices.

The study found that 49% of companies with turnover ranging
from £250m-£20bn intended to negotiate longer supplier payment terms, which
would inevitably filter through the supply chain to smaller companies already
struggling to make ends meet.

The clouds that were on the horizon when we first conducted
this survey back in early spring are now right overhead, with businesses now
feeling the impact of this so-called ‘perfect storm'

"Adopting the same old blinkered approach of squeezing your
suppliers and delaying payments is a zero sum game where only a few winners
will emerge," said Andrew Ashby, KPMG advisory director.

"Companies need to be more focused on gaining improved
visibility and control of cash, and to work smarter across the supply chain to
create win-win opportunities that reduce the cash cycle for all participants."

The research found that 75% of businesses are already
experiencing with late payment and the same number has reduced access to
credit. This compares to figures of 23% and 14% respectively in the US.